KNIGHT RIDDER/TRIBUNE BUSINESS
NEWS
| Thursday, November
19, 1998 BY PAMELA YIP, HOUSTON CHRONICLE
Nov. 19--Federal securities
regulators have sued three Houston-area businessmen, accusing them of defrauding
investors in the $14 million sale of so-called "prime" bank investments.
Also named in the lawsuit by the Securities and Exchange Commission
were several businesses, including Funding Resource Group of The Woodlands,
FMCI Trust of The Woodlands and Funders Marketing Co. in Jasper. The suit
was filed Friday in U.S. District Court in Dallas.
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| The SEC
froze the assets of the defendants and the court has ordered them to account
for investor funds. The court also appointed a receiver
to take control of the assets.
Among those named in the complaint are Steven C. Roberts, who was managing partner of Funding Resource Group; Raymond G. Parr of Jasper; and Robert Cord, also known as Robert F. Schoonover Jr., of Seabrook. Roberts and Parr couldn't be reached for comment. Cord, under the Schoonover name, is being held in the Oklahoma City Federal Transfer Center on charges of fraudulently using a Social Security number with intent to deceive, according to federal prison officials. Dallas attorney Barry Zisman, who represents two other men named in the lawsuit, Quentin Hix of Dallas and Gene Coulter of Grapevine, said his clients didn't do anything wrong. "If anybody's aggrieved here, it's our clients," he said. "I don't know if there was anything that was improper that was done, and if there was, it certainly wasn't by our clients." SEC officials said the case is a major one. "This is a fairly large fraud that we've been alleging," said Harold Degenhardt, the SEC's district administrator in Fort Worth. The SEC said there has been a rise of fraudulent schemes involving the trading of so-called "prime" bank investments. Those investments typically take the form of notes, bonds, letters of credit and so-called guarantees by the world's largest banks, the agency said. Sellers of those investments typically promise or guarantee unrealistic rates of return, the SEC said. In this case, the government alleges the men raised $14 million by telling investors that the prime bank investments were guaranteed by banks or insurance companies and that they would generate returns of between 6 and 18 percent per month, SEC investigators said. "In fact, the trading programs did not exist, there were no such guarantees and these defendants used most of the investor funds for their own benefit," including the purchase of cars, antiques, homes and swimming pools, SEC officials said. "In each one of these prime bank schemes, you typically have a fairly good number of victims," Degenhardt said. "Here, you have well over 100 victims in 17 states." The SEC also said the defendants operated a Ponzi scheme, in which money paid by later investors is used to pay earlier investors. ----- Visit Houston Chronicle Interactive on the World Wide Web at http://www.HoustonChronicle.com (c) 1998, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News.
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